American companies are emerging from a protracted period of contraction that harks back to the dark days of the Great Recession. The bottom line is growing once again.
That's the preliminary update on fourth quarter earnings season. So far, 175 of the S&P 500’s companies have reported. Sales and earnings per share year-over-year growth is up +3% and 4.4% respectively.
If this growth holds, it would mark the first time S&P 500 aggregate earnings have grown for two consecutive quarters in almost two years.
Earnings: The numbers...
#Earnings #ProfitRecession $SPY
As you can see in the Chart of the Day below, fourth quarter earnings growth is firming up. Here are the key takeaways:
- Aggregate year-over-year SALES growth = +3.0%
- Aggregate year-over-year EPS growth = +4.4%
- Financials (38 of 63 have reported SALES and EPS growth of +4.1% and +8.8% respectively)
- Tech (32 of 66 have reported SALES and EPS growth of +8.1% and +9.8%, respectively)
- Energy (8 of 35 have reported SALES and EPS growth of -1.8% and -51.2%, respectively)
As Hedgeye CEO Keith McCullough writes in today's Early Look, "In other words, bottom-up EARNINGS growth continues to accelerate from its #ProfitRecession lows of 2016 (when year-over-year aggregate earnings growth went negative) and Energy earnings in particular are about to really accelerate."
Bottom Line: The Profit outlook is looking up
The worst is behind us. The bottom dropped out of earnings in the second quarter of 2016. Profits declined for five consecutive quarters, a streak not seen since the dark days of 2009.
There's a lot to like about the current environment. Earnings are growing once again. The American economy is heating up. Stock market volatility is falling. Investor fund flows suggest there's more upside in equities ahead. We're bullish on the U.S. stock market.
